Tencent Music released his financial results on the morning of November 12, Beijing time, with revenue exceeding Bloomberg's previous expectations and net profit basically in line with expectations:

• The total income reached 6.507 billion yuan, an increase of 30.95% over the same period last year.

• Operating profit reached 1.188 billion yuan, an increase of 11.86% over the same period last year.

• The net profit reached 1.023 billion yuan, an increase of 6.12% over the same period last year.

The company's shares rose 2.64% to $14.37 yesterday, with a market capitalization of about $23 billion, roughly in line with the market capitalization of Spotify, another lossmaking music streaming giant.

I. user data is eye-catching and revenue is growing steadily

1. Excellent growth of paying subscribers

Q3 paid subscriber growth data are excellent both in terms of month-on-month and year-on-year terms. The number of paying users for online music reached 35.4 million, up 42.17 percent from the same period last year, with a net increase of 4.4 million from the previous year, the largest net increase since 2016. The number of paying users for social entertainment reached 12.2 million, up 23.23 percent from the same period last year, with a month-on-month growth of 9.91 percent.

2. Users' ARPPU and payment rates increase steadily.

Due to the integration of CMC in 2017, the company's online music ARPPU fell back to the level of 8 yuan, but gradually began to pick up in the past two years, and with the improvement of domestic copyright awareness and the training of user payment awareness, online music users' payment rates are constantly increasing.

The social entertainment business is steadily improving in terms of user ARPPU and payment rates. although the number of users is smaller than that of online music, the data of user ARPPU is higher, which is basically maintained at more than 120 yuan after 2019, which is a great boost to the company's overall performance.

3. The company's revenue is growing continuously.

The growth of overall users, the increase of user payment rates and the increase of user ARPPU jointly drive the continuous growth of the company's revenue data, especially after 17 years of integration of CMC, the company's annual revenue has increased from 1 billion to 10 billion, which effectively ensures and promotes the strategic promotion of the company in all business lines.

The strong growth of the company's Q3 paying user data has directly contributed to the improvement of various revenue data. From the side, it illustrates the attractiveness of the platform content to users, as well as Tencent Music's influence on the entire online music market.

Second, content is the key to the platform

Why users choose a music platform to listen to music, the key lies in the content of the platform. For example, if you like Jay Chou, but there are no resources on the platform, then you can only choose other platforms. Therefore, the current music platforms pay great attention to the maintenance of copyright content, and have to strengthen their own investment in content.

1. the mainstream and the long tail should be grasped in both hands and hard in both hands.

Q3 Jay Chou's "Don't cry", Taylor Swift's digital album and TFBOYS's 6th anniversary concert are all mainstream resources that can effectively bring about user transformation.

In addition to the routine procurement of external high-quality content copyright, Tencent pays special attention to the integration of resources in the industrial chain. On the surface, what you see is a Tencent Music, but in fact, there are Tencent videos, Tencent comics, Tencent games and other related resources behind.

For example, the extremely popular "Chen Ling" in Q3 was first transformed from the "Master of the Devil's way", and then broadcast alone on Tencent's video, eventually gaining a large number of fans, followed by concerts to quickly boost online music revenue. IP development, cross-resource linkage, fan economy, Q3 Tencent Music this set of play, can be said to directly explore a way to improve the realization ability of online music.

In addition, Tencent Music also does not let go of long tail content, the platform provides independent musicians with a complete set of process services from upload to feedback, including music upload, data analysis and so on. In the three quarters of this year, the number of songs uploaded by independent musicians has more than doubled compared with the same period last year, and the number of original music played every day is twice as much as in the same period last year.

With his strong ability to integrate resources, Tencent Music undoubtedly has a strong advantage in content.

2. Content attracts users, and social entertainment becomes a sharp tool for cash realization.

The advantage of platform content can effectively attract users, but in the domestic market where the payment habit is still being cultivated, Tencent Music's cash ability is mainly reflected in the social entertainment business.

The three major music platforms, the online singing community, the company continues to strengthen product innovation and increase user participation.

Develop music recognition function, introduce the most popular short videos, add chorus function to singing to enhance users' interactive experience of listening to music; provide UGC and PGC video content to achieve a virtuous circle of music and television, movies, games and variety shows, and continuously provide a source for original content. On the phone call this morning, management mentioned that the platform will continue to enhance the social experience of users in the future.

Third, the huge user base achieves the distribution value of the platform.

Considering the domestic economic development and cultural history, it can be found that the preference for music varies greatly from place to place, so whether it is for domestic Chinese music or overseas record giants, there is no doubt about the value of Tencent Music's platform for the distribution and distribution of its content.

Through big data and AI technology, the platform can achieve personalized and intelligent push for users, and fine distribution and marketing for content providers.

Take QQ Music as an example. AI selects 300 songs a day, and then through editing and selection, it can make the songs more popular, increase the playback volume to 108%, and increase the playback time by 25%.

According to the International recording Association, China spends 17.7 hours a week listening to music. with the gradual transformation of music content to digital, the value of Tencent Music's platform will become more obvious.

In addition to the steady development of the domestic market, at the beginning of today's conference call, the management specifically pointed out that Tencent Music is particularly popular in the Philippines, Thailand, Malaysia and other regions. Internationalization is expected to become a major strategy for the company to continue to advance in the future.

At present, the most international music streaming platform is Spotify, and the recent growth in Q3 Spotify is mainly driven by emerging markets. Due to the significant improvement in infrastructure and the rapid popularity of smartphones in Southeast Asia in recent years, the region has also become the fastest growing market for Spotify users.

Therefore, when the domestic market is gradually saturated and the flow population dividend begins to fade, the status of overseas markets will become increasingly apparent.

Conclusion: content + social networking has become the cornerstone of growth, constantly innovate models, forge ahead in overseas markets, and the moat is more stable.

High-quality content and innovative products have become the cornerstone of Tencent Music's continuous growth. Although social entertainment is currently the main source of income, online music revenue is expected to continue to increase with the cultivation of domestic awareness of payment.

And more importantly, Tencent Music is constantly trying new models to improve his liquidity ability, enter overseas markets, and cultivate new driving forces for future growth, coupled with excellent resource integration capabilities, the platform's moat in the streaming music market will be more stable.